Wall Street drops amid debt ceiling uncertainty and weak data (Lead)

Major indexes surged more than one percent shortly after the opening bell Monday as investors felt relief after US President Barack Obama announced Sunday night that Democrats and Republicans had reached agreements on raising the government’s debt ceiling and avoided a default.

However, within 10 minutes after the opening bell, the Standard & Poor’s 500 and the Nasdaq Composite both erased early gains as investors began to worry the debt vote late Monday.

The plan which Obama mentioned late Sunday still needed enough votes to pass in both House and Senate. This means the debt ceiling solution was still pending. Monday’s falling also due to weak data of manufacturing sector.

According to the Institute for Supply Management, the manufacturing gauge in July dropped 4.4 points to 50.9 percent in July, the worst reading since July 2009. The reading was far away below the 54 percent market consensus.

The sluggish manufacturing activities suggested that the recovery of US economy still had a long way to go.

Also, investors worried that the possibility that US government might lose its triple-A credit rating still remained high as some rating agencies warned to downgrade the US rating even if it successfully avoided a default.

The US dollar traded mixed against major currencies in late New York trading Monday as US lawmakers reached agreements to avoid debt default and data showed US manufacturing activities were still weak in July.

Oil rose after opening as market sentiment was lifted by the debt deal reached in Washington Sunday evening. New York crude benchmark WTI touched the day-high of $98.60 a barrel.

But the rally lost momentum after the weak ISM data. The oil prices fell 81 cents or 0.85 percent to settle at $94.89 a barrel.

The Dow Jones industrial average fell 10.75 points, or 0.09 percent, to 12,132.49. The Standard & Poor’s 500 was down 5.34 points, or 0.41 percent, to 1,286.94. The Nasdaq Composite dropped 11.77 points, or 0.43 percent, to 2, 744.61.